Time was when the Association of South-East Asian Nations (Asean) would look with mild disdain at an India that could not seem to get its act together, while the many Tiger economies of the region recorded transformational economic growth and commendable social progress. From India’s perspective, Asean’s success on multiple fronts made it a sufficiently attractive prize to prompt the announcement of a “look East” policy in the early 1990s. Since then, India has knocked at Asean doors for membership of various clubs — the Asian regional forum, the “Asean + 3” dialogue, and Apec — with only partial success. And India has not been shy of holding up Asean as an economic model to copy — as in the promise of bringing tariff rates down to Asean levels.
Now, the picture is changing. In the next two years, India’s GDP will finally become bigger than that of all 10 Asean members combined. This will cap a decade when India’s economic growth has consistently been faster than yesterday’s Tigers. The change of relative speeds is emphasised dramatically by the manner in which India’s GDP has grown in a recession-hit world, while Asean’s growth last year was barely 1.5 per cent. It is worth recalling that, as recently as in 1995, India’s GDP was barely half Asean’s; so it has been a dramatic turnaround in 15-17 years. Asean’s population is only half India’s, so its per capita income levels will still be twice India’s. But given the prospect of continued rapid growth in India, even that gap could close in another decade.
Seven years of growth that has averaged 8.3 per cent per annum has changed another dynamic. For although China has put India in the shade by clocking GDP that is now three-and-a-half times India’s, the Indian economy today is as big as China’s was a decade ago — in constant dollars. If India accelerates further (as it promises to), the awesome thought suggests itself that, a decade from now, India could be close to today’s China in economic might. China itself will have grown further in the interim. These scenarios are more dramatic than the original Brics projection that Goldman Sachs made in 2001, and the question is: what kind of adjustments will the world have to make, to allow for the most momentous change in a century?
The point, of course, is that India cannot get there with business as usual. A great deal will have to change: basic and advanced education, public health, the quality of administration, urban management, the maintenance of law and order, the building of the physical infrastructure (as someone said the other day, 80 per cent of the infrastructure that India will have in 2010 is yet to be built), project execution capability and, of course, mainstream political thinking. The global questions are as important: energy sources and pricing, providing the material basis for growth (what if Indian steel consumption goes from 65 million tonnes to 250 million tonnes?), global markets that can meet these and other challenges…
But the biggest test will be of one’s imagination. Ten years ago, overtaking Asean seemed a daunting task. Now, can India think of overtaking Germany and Japan? Does India’s vision for itself encompass a GDP that could be $4 trillion before we know it — after all, that is only a little more than the near-trebling that has occurred in the last decade (from $450 billion to $ 1.3 trillion)? And if one’s vision does encompass this, can the country drum up the action to actualise its vision of its own future?